Tuesday, October 7, 2014

70 million Population Puzzle

7000万人口的迷思夏伟文 & 陈薛卉 (8th Sept 2014)

All
of a sudden, countries around the world are awakened from the nightmare of
dwindling population growth rate. Current population growth rates are seen too
low. In contrast to the mid 1960s to mid 1990s era, rapid population growth
rate has coined phrases like “Generation-X”, “Generation-Y” and “baby boomers”.
During those years, especially in 1990s, South East Asia, Korea and few other
countries see “miracle” economic growth in thanks to increasing labor supplies.

Statistics
from the World Bank show that population growth rates for year 2013 are lower
than average between 1960 and 1990 for all 14 Asian countries selected (see
Table 1). Relative lower population growth rate also recorded in 11 out of 14
other randomly selected non-Asian countries. Australia and Germany do not show
significant different while United Kingdom recorded positive percentage
changes.

Table
1: Selected Population Growth Rates

Country

Average I (1960 -
2013)

Average II (1960 - 1990)

Average III (1991 -
2013)

2013

ASIA

China

1.35

1.77

0.78

0.49

Hong Kong

1.65

2.14

1.00

0.46

India

1.93

2.19

1.59

1.24

Indonesia

1.96

2.34

1.46

1.21

Japan

0.61

0.96

0.13

(0.17)

Korea, Rep.

1.34

1.83

0.69

0.43

Lao PDR

2.19

2.31

2.03

1.85

Malaysia

2.45

2.69

2.13

1.62

Philippines

2.51

2.88

2.01

1.73

Qatar

7.22

7.68

6.59

5.60

Saudi Arabia

3.68

4.55

2.50

1.89

Singapore

2.32

2.19

2.49

1.62

Thailand

1.71

2.44

0.74

0.34

Vietnam

1.79

2.12

1.33

1.05

OTHERS

Australia

1.54

1.71

1.32

1.78

Brazil

1.93

2.42

1.27

0.86

France

0.67

0.77

0.53

0.53

Greece

0.53

0.66

0.36

(0.55)

Germany

0.20

0.31

0.06

0.24

Netherlands

0.74

0.91

0.51

0.29

New Zealand

1.14

1.15

1.12

0.85

Russia

0.36

0.73

(0.14)

0.22

Spain

0.81

0.82

0.80

(0.24)

Sweden

0.47

0.45

0.50

0.77

Switzerland

0.81

0.82

0.81

1.05

Turkey

1.90

2.25

1.42

1.26

United Kingdom

0.38

0.30

0.49

0.63

United States

1.07

1.10

1.03

0.72

Source:
World Bank; highlighted are the so-called “miracle economies” of the 1990s

Malaysia
population growth rate for 2013 is mere 1.62, which is 1.07 percentage point
lower than its population boom years of 1960 to 1990. Is Malaysia’s National
Population Policy (1984) to reach 70 million populations by 2100 still ongoing
or already been forgotten? Does high population compatible with current
Malaysia’s Economic Transformation Policy (ETP)?

Population Control Policies U-Turn

The
most stringent population control policy is China’s one child policy which is
established in 1979. In November
2013, the Chinese government relaxed the policy by allowing families to have
two children if one of the parents is an only child.

Singapore also makes a U-turn. To counter rapid
population growth after World War II, Singapore promoted anti-natal policies
known as “Stop at Two” (two children family) as well as sterilization during
1960s to 1970s. In the 1980s and thereafter, they completely reversed the population
control for “Have Three of More children if you can afford it” program,
“Graduate Mothers’ Scheme”, “National Night” on 9th August 2012 for
couples to have babies as their civic duty as well as various incentives. Lack
of citizen is believed to be among the main reasons Singapore economy being
over-dependent on supply of foreign labors especially from Malaysia and China.

South Korea also implemented population control policy from 1960s to 1990s but has it U-turned in the 2000s. In the 1970s, its government urged their citizens to have only two children so that they can raise them well and avoid poverty. This was further tightened in 1980s with slogan of “let’s just get one child and raise him/her well”. Dramatic U-turn was announced in September 1994 that seen its population policy slogan in the 2000s changed to “Papa, I don’t want to be alone. Mom, please have my younger sister or brother”.

Malaysia population policy also made U-turn. To
curb high fertility rate in the 1960s, National Family Planning Act (1966)
No.42 and National Family Planning Board were established to bring down
population growth rate from 3 percent in 1966 to 2 percent by 1985. Yet, from
the World Bank statistics, these policies seem less effective. In 1984,
Mahathir replaced family planning with the National Population Policy that
targeted 70 million populations by 2100. Given World Bank’s estimation of
Malaysia’s current population at 29,716,965 and year 2013 growth rate of 1.62%, this target is easily.
To be exact, we will achieve 70.78 million populations by about 54 years from
2013 or year 2067.

Big Population: ETP’s Sweat Dream?

Economic Transformation Program (ETP) did not
specifically plan for high population. However, it has highlighted concern that
Malaysia’s relative small population could limit the number of areas that its
economy can specialize in and be truly globally competitive. Big population
particularly in Greater Kuala Lumpur (estimated to approximately
6 million) is expected to create economic
agglomerations that contributes about RM263 billion (30% of total) to the
nation’s GNI.

Figure 1: GDP growth vs. Population growth, Average 1960 - 2013

Figure 1 plots average GDP growth rate against
population growth rate for the selected countries as in Table 1. China, South
Korea and Philippines are excluded as they are outliers. The figure and
statistical interpretation reveal that average population growth rate explained
77.6% of average GDP growth rate. It also shows a positive relationship, hence
justifying hypothesis that claims the 70 million population policy can help
boost economic growth.

To support rapid expansion towards achieving
developed nation status by 2020, Malaysia needs great amount of skill labors
both from within and abroad. Huge domestic market base provide economies of
scale as enjoyed by country like China also crucial to achieve many Entry Point
Projects (EPP) of ETP.

In addition, ETP has even prepared itself for
possible aging population. For example, under “Healthcare” National Key
Economic Area (NKEA), three of its Senior Living EPPs already planned mobile
healthcare service, institutionalized aged care and retirement villages for the
old folks. Thus, if our population keeps growing steadily, any aging population’s
negative effect can be minimized. In contrast, there will be more young people
energizing the economy with their new idea, consumption and labor supply.

Big Population Nightmare

The biggest nightmare from Malaysia’s 70
million population policy should be Malthusian trap. According to Thomas
Malthus, population increases are limited by subsistence and misery. On
subsistence aspect, food production needs to be increased. So far, Northern
Corridor of Economic Region (NCER) has been planned to boost modern and commercial agriculture.

However, Oliver De Schutter’s United Nations Special
Rapporteur on the Right to Food – Malaysia (visit date 9 to 19 December 2013)
do importantly highlighted some serious concerns. Quoted his report in length, Malaysia’s
food trade deficit grew from RM1 billion in 1990 to RM13 billion in 2013. The
country is self-sufficient in some food commodities, such as poultry
(self-sufficiency rate of 128 per cent), eggs (115 per cent) and fisheries (101
per cent), but not in others, such as rice (71 per cent), fruit (66 per cent),
vegetables (41 per cent), beef (29 per cent), mutton (11 per cent) and milk (5
per cent).

National Agrofood Policy 2011 – 2020 does focuses on the
issues of food security, competitiveness and sustainability of agrofood
industry as well as income level of agriculture stakeholders. Yet, do all our
efforts enough to ensure sufficient food for a greatly enlarge population in
near future? Many factors can further deteriorate food production such as
current unpredictable prolonged drought, fast mutating crops virus, food
wastage, haze, use of food for bio-fuel and loss of local interest in staple
food plantation due to urbanization and higher profit from commodities
agriculture like palm oil and rubber.

Not only food security, does the country create enough job
opportunity for the increased supply of labors? Will lots of labor from big
population hinder our production to move towards capital intensive to achieve
higher competitiveness?

Conclusion: The “70 million
Population” Puzzle

Having
big population is a puzzle as it comes with both benefit and detriment. On one
hand, big population may be a sweat dream to future economic growth. On the
other hand, unable to address the peril from big population, like food security
and job availability, may turn our dream into nightmare. Malaysia should put
more effort to mitigate the nightmare to ensure a sweat 70 million population
dream.

[Chinese version published at Nanyang Press, 8th September 2014. Available online at http://www.nanyang.com/node/647732. This English version may be slightly different from the Chinese online/printed newspaper version]